Wednesday, February 11, 2009

The Dangers of Leadership

For better or worse, the current crisis is a terrific leadership learning laboratory. But first, check out David Leonhardt's column in Wednesday's NY Times today. He does a much better job than I did last week of laying out the spend-or-save dilemma. The headline? Spend to save. Lots of homey examples. The one I like the best is to buy a seltzer-making machine.

Back to the dangers of leadership. Both Obama and Geithner are trying to level with their constituencies, to tell hard truths: (1) vengeance is less important that getting us out of this mess; (2) we don't have the foggiest idea what will work, neither does anyone else, but we are making our best guess, will run thoughtful experiments, and will closely and publicly monitor how they are working and not hesitate to make changers if necessary; and (3) if we can't get some people who we don't like very much to play with us (Republicans on the Hill, Wall Street folks whose greed was the proximate cause of the meltdown, and vulture investors who could make fortunes out of other people's misery) there is no chance for a recovery any time soon.

The push back has been enormous. See Maureen Dowd (http://www.nytimes.com/2009/02/11/opinion/11dowd.html?ref=opinion) and the lead editorial in Wednesday's Times (http://www.nytimes.com/2009/02/11/opinion/11wed1.html?ref=opinion) today. We want simplicity in the face of complexity, clarity in the face of ambiguity, and unbridled confidence from authority regardless of its intellectual honesty.

Don't you have to love Joe Biden? He cannot stop telling uncomfortable truths. Early in the Presidential campaign he got in a lot of trouble for saying that Obama was the kind of clean cut African-American that people could vote for. He was right, of course, but he was not the right person to say it. Then a couple of days ago, he said that the Obama recovery plan had a 70% chance of working (even that might be optimistic). But we don't want our authorities to tell us that what they are proposing has a 30% chance of failure, even if it does!

What I really worry about is that poor Tim Geithner, by all accounts a smart and decent fellow, is in no position to carry the water he has to carry. Between his Wall Street lineage, his culpability for not anticipating while he was at the NY Fed the mess he is trying to fix, his youth, and his own tax problems we will just not tolerate tough messages from him, the way we will from his boss, in whom we have invested enormously. As my friend and former colleague Glenn Loury has so brilliantly written, the speaker has content. Will we ever listen to Tim Geithner when he is telling us what we need to hear rather than what we want to hear?